KBRA Releases Research – PACE Overview and Market Evolution

KBRA releases research on the property assessed clean energy (PACE) market, origination and issuance trends for PACE securities backed by residential (R-PACE) and commercial (C-PACE) properties, recent regulatory activity in the sector, and future expectations for the market.

Key Takeaways

• PACE securities are generally collateralized by assessments on residential properties, commercial properties, or a combination of both.
• R-PACE origination and securitization volumes peaked in 2016 and have declined since, primarily due to regulatory headwinds. Conversely, C-PACE volumes have been increasing over the last several years, although total aggregate volumes remain well below that for R-PACE.
• The availability of R-PACE financing is limited to the three states of California, Florida, and Missouri, with California typically accounting for most R-PACE assessments. Although Florida has gained ground in recent years, overall origination and securitization activity are declining.
• Historically, most (91.1%) R-PACE assessments are securitized via public/144A transactions, of which KBRA has rated nearly three-quarters. However, the opposite is true for C-PACE, with only 18.1% of assessments securitized publicly. That said, C-PACE public/144A securitization activity has been increasing, signifying greater market acceptance and interest.
• KBRA expects the C-PACE market to continue its upward trajectory as it becomes more broadly available and competitive with other forms of financing.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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